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The New York Court of Appeals said a trial judge erred in dismissing Cadwalader's
statute of limitations defense, and in deciding there weren't any triable questions
of fact as to whether the firm performed negligently when it represented Snyder in
connection with his private equity firm's efforts to acquire Six Flags Inc. and its
theme parks.

Timing Questions

The short memorandum opinion resolved an appeal that generated more than 300 pages
of appellate briefing and nearly 3,000 pages of exhibits.

Snyder's private equity firm, Red Zone LLC, accused Cadwalader of botching a contract
purportedly intended to cap at $2 million the fees UBS Securities LLC was to receive
for acting as Red Zone's financial adviser during Red Zone's attempt to acquire Six
Flags.

After the Six Flags transaction, UBS sued Red Zone and won a ruling that it was entitled
to $10 million in fees.

Red Zone then sued Cadwalader for malpractice. The law firm argued the complaint
was filed too late because its representation of Red Zone in connection with the UBS
transaction ended in 2005—six years before the company filed suit.

But a trial judge and appellate panel said the continuous representation doctrine
tolled the three-year statute of limitations.

“Although defendant drafted the [contract]
in 2005, it provided legal advice throughout the UBS litigation from 2007 through
late 2010,” the appellate court said. “Although plaintiff was represented by other
counsel in the UBS litigation, plaintiff and its trial counsel continued to confer
with defendant and share privileged documents regarding its defense strategy.”

The high court disagreed, saying the lower tribunals failed to analyze the continuous
representation issue properly.

“Specifically,” it said, “triable questions of fact exist regarding whether the statute
of limitations was tolled by the continuous representation doctrine in light of:
the significant gap in time between the alleged malpractice and the later communications
between the parties; the changed nature of the alleged legal representation of plaintiff
by defendant; the absence of any clear delineation of the period of such representation;
and defendant's submission of affidavits disclaiming any mutual understanding of legal
representation after 2005.”

Negligence Questions

The court of appeals said the evidence also suggested that “material triable questions
of fact exist regarding whether defendant failed to exercise the ordinary reasonable
skill and knowledge commonly possessed by members of the legal profession.”

In an
affidavit, the former Cadwalader lawyer who advised Red Zone during its negotiations with UBS
claimed he repeatedly warned Snyder about flaws in the contract that was intended
to limit the fees Red Zone would pay UBS.

Snyder, in
his own affidavit, used the phrase “outright lie”
four times to rebut those claims from former Cadwalader lawyer Dennis J. Block.

Snyder and Red Zone further argued that Block's statements in his affidavit were contradicted
by prior deposition testimony he provided during Red Zone's unsuccessful litigation
against UBS over the investment bank's fees.

The court of appeals said the appellate division erred in determining that Block's
affidavit in this case “flatly contradic[ted] his prior deposition testimony” in the
UBS litigation. Accordingly, the court said Block's affidavit “should have been considered
in opposition to [Red Zone's] motion” for summary judgment in this malpractice case.

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